Indra celebrated this Tuesday the first meeting of the negotiation period with the legal representatives of the workers of its subsidiary Indra Soluciones Tecnológicas de la Información (ISTI) to reach an agreement on the necessary measures for the transformation of its staff, in which it has proposed the depreciation of 1,036 jobs in order to increase the efficiency and competitiveness of the firm, as indicated by sources present at the meeting.
Indra has explained that the need to transform the workforce of its subsidiary ISTI, which includes its Information Technology (IT) division, is motivated by the falling results, declining demand from its customers and structural changes in the company’s business.
ISTI registered operating losses of € 24.8 million in 2018 and € 20.7 million in 2019, while its pre-tax losses were 23.3 million euros in 2018 and 12.9 million euros in 2019. At the same time, Indra’s subsidiary increased its personnel expenses by 9.1% from 2018 to 2019.
Also, in the first six months of 2020 ISTI’s revenues have fallen by 1.6%, the operating margin has fallen by 67.2% and the operating result (Ebit) has registered losses of 61 million euros compared to a positive result of 27 million in the first six months of 2019.
In the Indra group as a whole, in the first half of the year revenues are down 4%, operating margin down 58%, reported Ebit has been -78 million euros compared to 79 million positive in the first six months of 2019 and losses were 75 million, compared to profits of 34 million in the first half of 2019.
Indra emphasizes that the current national and international economic context is accelerating and deepening the trends and structural changes in the sectors where ISTI’s business is present. evidencing “significant changes” in the needs of its clients, which causes a decrease in demand for the company’s products and services.
In this sense, the technology and consulting company points out that this drop in demand has been evident in practically all sectors, accentuating in the last months of the year.
Sources present at the meeting between the company and the unions have indicated that these structural changes in the business have caused the current ISTI workforce to exist a set of profiles that, due to changes in the demand for customer services, due to their qualification and / or their remuneration level, impact on efficiency levels, productivity and competitiveness of the company.
Therefore, the sources have indicated that Indra, within the negotiation scenario with the legal representation of the workers, has proposed a restructuring process consisting of the amortization of 1,036 jobs at ISTI, almost 8% of its workforce, made up of more than 13,000 employees. At the end of June 2020, the Indra group staff was 28,142 professionals in Spain and 48,228 globally.
Sources have added that this restructuring proposal makes it possible to configure an optimized template structure, adjusted to a greater extent to the market context, characterized by relevant changes in the needs and demand of customers in the sectors in which ISTI operates, and allows for an organization with a higher degree of efficiency and competitiveness.
Action Plan in the Covid era
Indra announced last July, coinciding with the presentation of its results for the first half of 2020, an action plan to overcome its current difficulties, adapt to new market and demand conditions, eliminate inefficiencies and improve its competitiveness.
The general plan of action focuses on cost efficiency and prioritization of investments and resources, and is based on proactive management of new demand, boosting revenue, leveraging its technology capabilities, and accelerating the transformation of its operations.
Among its main lines of action, the rreduction of non-personnel costs, improvement of internal processes and new work models, redirect investment in capital expenditures (capex) and balance sheet adjustments, along with the necessary transformation of the workforce.
Structural changes in the market and in customer demand have led to the rethinking the continuity of some products and investments based on old technologies, given the foreseeable acceleration of digitization. This has meant the carrying out of write-offs of intangible assets for 95 million euros in the second quarter of 2020.